Wednesday 14th June 2017
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Wall Street gained, pushing the Dow Jones Industrial Average to a record high, as Federal Reserve policy makers started a two-day meeting after which they are widely expected to announce an increase in interest rates.
"The expectation of a rate hike…is widely held, and has been reinforced by the most recent round of Fed communications," Michael Feroli, an economist with JP Morgan, told Reuters.
Fed Chair Janet Yellen will hold a press conference after the meeting ends on Wednesday.
“The accompanying statement will be the major highlight: traders will focus on any details regarding the Fed’s balance sheet normalisation plans and the timing of the next rate hike,” Ipek Ozkardeskaya, a market analyst at London Capital Group, wrote in a note, Bloomberg reported.
“The Fed could pause its rate-hike marathon until the end of the year, given that the Trump-reflation trend is waning and the new government’s massive spending plans and fiscal reforms appear to be delayed,” Ozkardeskaya noted.
In 2.40pm trading in New York, the Dow gained 0.4 percent, while the Nasdaq Composite Index climbed 0.6 percent. In 2.24pm trading, the Standard & Poor’s 500 Index increased 0.4 percent. The Dow touched a record 21,332.77.
The Dow rose to a record high as advances in shares of Visa and those of Cisco, recently up 1.8 percent and 1.6 percent respectively, outweighed declines in shares of General Electric and those of Verizon, recently down 1.6 percent and 1.4 percent respectively.
Tech stocks stemmed their recent slide. Shares of Apple, Alpabet, and Microsoft all gained, up 0.7 percent, 0.8 percent and 1.3 percent respectively in afternoon trading in New York.
"The selloff in tech probably was a bit further than people expected, so there is some bargain hunting back into that sector," Rick Meckler, president of LibertyView Capital Management, told Reuters.
Meanwhile, a record 44 percent of fund managers polled in a monthly survey, conducted between June 2 and June 8, from Bank of America Merrill Lynch see equities as overvalued, up from 37 percent last month, Bloomberg reported. Even so, that doesn't mean the bull market is about to end.
“In March 2000 every waking investing individual knew the stock market was wildly overvalued, but that didn’t stop what was to follow,” Peter Boockvar, chief market analyst at The Lindsey Group, told Bloomberg. “In the ninth year of a bull market, things are expensive, that’s what just happens in the late stages.”
In Europe, the Stoxx 600 Index ended the session with a 0.6 percent gain from the previous close. France’s CAC40 Index added 0.4 percent, while Germany’s DAX Index rose 0.6 percent.
The UK’s FTSE 100 Index shed 0.2 percent.
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